The host announced the news during a taping of Thursday’s show, saying that he will step down when his current contract expires next year.

“The man who owns this network, Leslie Moonves, he and I have had a relationship for years and years and years, and we have had this conversation in the past, and we agreed that we would work together on this circumstance and the timing of this circumstance. And I phoned him just before the program, and I said ‘Leslie, it’s been great, you’ve been great, and the network has been great, but I’m retiring,’” Letterman said.

With a late-night tenure of 32 years (including 21 at “Late Show”), the 66-year-old Letterman is the longest-serving host in late night, having surpassed his mentor Johnny Carson for the title last year.

“I just want to reiterate my thanks for the support from the network, all of the people who have worked here, all of the people in the theater, all the people on the staff, everybody at home, thank you very much. What this means now, is that [band leader] Paul [Shaffer] and I can be married.”

Letterman — who reportedly makes nearly $30 million a year – last year signed a new contract extension, which was expected to be his last.

“We don’t have the timetable for this precisely down – I think it will be at least a year or so, but sometime in the not too distant future, 2015 for the love of God, in fact, Paul and I will be wrapping things up,” he added, to a standing ovation from the audience in the Ed Sullivan Theater.

Added Moonves in his own statement, “When Dave decided on a one-year extension for his most recent contract, we knew this day was getting closer, but that doesn’t make the moment any less poignant for us…There is only one David Letterman. His greatness will always be remembered here, and he will certainly sit among the pantheon of this business… It’s going to be tough to say goodbye. Fortunately, we won’t have to do that for another year or so. Until then, we look forward to celebrating Dave’s remarkable show and incredible talents.”

The turnover comes nearly two months after rival Jay Leno ended his 21-year tenure as host of “The Tonight Show.” NBC’s new late-night lineup of Jimmy Fallon and Seth Meyers has maintained the network’s hold on the No. 1 spot in the late night ratings race. Since the changeover in February Letterman is still No. 2, last week averaging 2.9 million viewers to Fallon’s 4.3 million (ABC’s “Jimmy Kimmel Live” drew 2.7 million viewers).

Letterman created “Late Show” in 1993 (after he infamously lost the “Tonight Show” job to Leno) and hosted NBC’s “Late Night” for 10 years, starting in 1982. He is the winner of eight Emmy Awards.

News of Letterman’s retirement first broke on Twitter Thursday afternoon, when R.E.M. guitarist Mike Mills — who is appearing on Thursday’s show – tweeted the host’s announcement during the taping.